Describe the hedging strategy that the company should take in each of these cases. Remember that a possible answer is that the company should not be hedging at all.

1. A Japanese manufacturer would like to hedge against the risk that the Yen will appreciate against the Euro, since the Eurozone is the company's main market.

2. A US company needs to make a one-time payment of 50 million dollars in Mexican Pesos in about 6 months, and would like to hedge against the risk that exchange rates may change.

3. A US manufacturing firm that produces cars in Mexico to sell in the US and the Eurozone would like to reduce the effect of currency fluctuations on its profits.

4,. A CFO from an oil company believes that oil prices will increase and wants to profit from this increase by investing in futures.

Answer rating: 100% (QA)

1 The appreciation of domestic currency Yen could bring losses to exporter as less Yen are obtained ... View the full answer